Street maintenance projects in the Gulf have already failed in three areas

Maintenance contracts for the northern and central areas are about to be put out to tender. A difficult winter brought the contracting company for the northern area a bill of millions.

The City of Lahti and Viherpalvelut Hyvönen oy have terminated the contract for the maintenance of the northern area of Lahti. Viherpalvelut Hyvönen was to manage the contract until 2028.

The decision to terminate the contract was taken because the financial statements for the first year of management resulted in a heavy operating loss for the company. The contractor will have to pay the city more than €1.2 million.

The city and the company have now negotiated payment arrangements, which will be implemented in five instalments. The agreement also includes a contract termination agreement by mutual agreement.

The maintenance contract is managed in such a way that after the maintenance year, the financial statements are drawn up. Realized costs are compared to the agreed target price. If the difference is negative, there is a business loss. The loss is split between the city and the contractor in half up to the ceiling price. The part exceeding the ceiling price is paid by the contractor.

The costs went beyond the ceiling price, because the previous winter was tough for the contractor.

– We had a difference of opinion on how the realized expenses affect the target price for the following year, says Juurinen.

However, he emphasizes that the payment arrangements and termination of the contract have been made in good agreement with the city.

According to Juurinen, the company has been able to prepare for a large expenditure.

– This is not an easy situation for the company, but for the time being we will manage. We will take care of this winter as agreed in the package.

Viherpalvelut Hyvönen employs 80–85 employees year-round. In addition to Lahti, the company operates in the capital region and Etelä Savo.

The city will immediately tender a new contractor for the area. The work on the new contract will start at the beginning of May.

New call for tenders for the city centre area

The contract for the downtown area is also coming up for tender. At the moment, the tender has been suspended when the city noticed a mistake and ambiguities in the procurement procedure.

There was an error in the text defining the thickness of the snow layer in the city’s tender request. In addition, there was an unclear entry in the tender request about damage caused by the contractor to the customer’s property.

No bids were received for the request for bids made in December.

Last year, Yle reported on the maintenance contract for the southern area, which resulted in significant additional costs for the city due to an error in the tender.